Michael D. Moberly October 22, 2008
In my view, this financial crisis is a perfect backdrop for kick starting more discussions about intangible assets, if for no better reason than the economic fact – business reality that increasing percentages, as much as 75+%, of the value, sources of revenue, sustainability, and future wealth of most company’s lie in – are directly linked today to intangible assets.
A good starting point to such discussions is recognizing that intangible assets are not the sole province of large, multi-national Fortune 500 types of companies, nor high-tech firms with intensive R&D programs and massive portfolios of intellectual property. Rather, intangible assets are integral to ‘main street’ companies, that is, the thousands of SME’s (small, medium enterprises) and SMM’s (small, medium multinationals) that are frequently and proportionately rich in intangibles. Unfortunately, while intangibles play a very significant role – contribution to both SME’s and SMM’s, just like they do to larger corporations, they still routinely go un-acknowledged, and under-appreciated. Its time though that intangibles become part of today’s (financial crisis) discussion and considered part of ‘main streets’ solution.
There are many reasons why the financial crisis dialogue is not being more attentive to intangible assets. One is intangible assets are still not quite part of the everyday lexicon of c-suite’s, board room’s, D&O’s, and business unit management. Fully recognizing the range of intangible assets a company has developed or acquired and their contributions are still sometimes considered a little (too) esoteric and out of mainstream ‘mba precepts’.
Second, it seems to me, we’ve become overly focused on the 100,000 foot level cash infusions (bailouts) to the presumably ‘tipping point’ Wall Street – New York-based banks and insurance companies. The manner in which the bailouts (rescues) have been structured thus far anyway, seemingly overlook my reality that the markets are, in many respects, super-sized intangible assets. That is, ‘the markets’ have been, by far, the dominant theme of this financial crisis dialogue, exist, evolve, flourish, or fold largely on the basis of image, goodwill, reputation, and especially confidence, all of which are intangible assets!
Third, I have yet to hear any of the bailout decision makers mention intangibles in terms of constituting a link in the (financial crisis) solution chain, especially for those ‘main street SME’s and SMM’s that have virtually no expectation of receiving a ‘personalized’ bailout. I suspect the bailout decision makers pay far too much attention to devising relatively shallow, dumbed-down, focus grouped phrases and sound bites designed to simultaneously draw the ire of ‘joe the plumbers’ as well as quell the concerns of baby boomer parents, aunts, and uncles who remember, all to well, the Great Depression and consider making a ‘run on their bank’ both a rational decision and possibly necessary option.
Perhaps, instead, we should try injecting some useful and relevant dialogue about intangible assets which quite possibly may (a.) deliver more probable outcomes, and (b.) contribute to strategic structural changes to current barriers to intangible asset monetization.